The Trade That Led to Creation of D.C.

Once the Constitution was ratified and became the law of the land, President George Washington began lobbying Congress to select a site for the seat of the national government. Constitutionally, President Washington was well within his rights and power to ask Congress to create a location for the government’s headquarters.

Article I, Section 6, Clause 17 of the U.S. Constitution that created the legislative branch says it has the power “To exercise exclusive Legislation in all Cases whatsoever, over such District (not exceeding ten miles square) as may, by Cession of particular States, and the Acceptance of Congress, become the Seat of the Government of the United States, and to exercise like Authority over all Places purchased by the Consent of the Legislature of the State in which the Same shall be, for the Erection of Forts, Magazines, Arsenals, dock-Yards, and other needful Buildings…

The framers of the Constitution were clear in their direction in how big and who would govern it but not where. At the time, the Federal Government was based in New York City. Prior to New York, the Continental Congress had been in Philadelphia.

Fresh in our Founding Father’s minds was that New York City was occupied by the British Army from the summer of 1776 to November 1783. During the war, the Continental Congress moved to Baltimore, Lancaster, and York when Philadelphia was threatened by the British Army. It also left the Pennsylvania city when threatened by the Pennsylvania Mutiny of 1783, operating first from Trenton, NJ, then Annapolis, MD, and finally Princeton, NJ, before returning to Philadelphia.

A national capital was not a new idea. Several sites were proposed under the Articles of Confederation, and all were in either NY, NJ, or PA, something the southern states would not accept. Under the Articles of Confederation, the Continental Congress did not have the power to create a national capital, so the issue died until the new Constitution empowered the Federal government to create a home.

The location that made it through the House of Representatives was in Columbia, Pennsylvania on the Susquehanna River between York and Lancaster.

The Senate bill specified a site on the Delaware River near Germantown, PA. Both the House and Senate dug in on their choice, and a compromise did not seem possible since the Southern States voiced their opposition to any capital in a Northern “location.”

However, Congress also faced another thorny issue: the debt accrued during the War for Independence. The U.S. owed money to many of its own citizens, as well as France, Spain, and the Netherlands. Worse, depending on the loan or bond, it was either in or about to be in default.

Alexander Hamilton, the Secretary of the Treasury, proposed that the Federal Government assume all the debt and be responsible for repaying it. Again, the Southern States, which had repaid the money they borrowed to help finance the war, were opposed because it meant their citizens would be forced to pick up a portion of the $21.5 million (~$729,906,304 in April 2024).

Credit Thomas Jefferson, then the Secretary of State, to bring James Madison and Alexander Hamilton together at a private dinner to see if they could work out a deal. What emerged and was ultimately passed were two bills. One was The Residence Act of 1790 which created the District of Columbia on the north shore of the Potomac.

In return for the Maryland location, Madison and the Southern states dropped their opposition to the Federal government picking up the tab for the Northern States debt allowing the Assumption Act of 1790 to be passed in which the Federal government assumed all remaining war debts and guaranteed payment. The passage of the two bills is also known as the Compromise of 1790.

Image is Thomas Jefferson’s 1791 sketch of his concept of the Federal City, Library of Congress.



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